(USAGOLD – 6/28/2019) – Gold continued to pace the sidelines this morning awaiting the outcome of the Trump-Xi meeting in Japan on Saturday. The good news, though, comes from a technical perspective. For a second time this week, the yellow metal found support just above the $1400 mark then trekked higher regaining almost $10 in the price to finish at $1411. In today’s early going, it is up another $3 at $1414. Silver is level on the day at $15.28.
Whether or not gold has drawn a line in the sand at $1400 remains to be seen, but traders and speculators are likely to take note of those reversals as a good sign. As of this morning’s pricing, gold is up $15 for the week (1%) and up $108 in the month of June (8.25%). Silver is level on the week, but up 69¢ for the month (4.75%).
A Financial Times article on gold published this morning highlights a couple of eye-catching quotes from money managers whose clients invest in gold. Laurie Kamhi, managing director of a fund that serves entrepreneurs and executives says, “You’d be surprised at how many of them invest in bars as a way to store money.” Brent Armstrong, a partner at Weatherly Asset Management which caters to clients $2 million to $25 million in assets, says gold is a unique commodity. “We can look at its use in jewelry and electronic products,” he says, “but it’s also been a human emotional store of value for thousands of years.”
Money managers, by and large, focus their attention on the bottom line, i.e., the return on investment. With gold, though, there is also a psychological reward – peace of mind. In the end, there is much to be said for the non-monetary side of the precious metals, i.e., that quality which addresses the need for a reliable store of wealth in financially challenging and uncertain times.
Quote of the Day
“I remember being told many years ago on a South African game reserve that the buffalo was the most dangerous of the big five game animals. In large part, this is because of the complacency shown towards them relative to the other, more obviously dangerous big five game animals (ie the lion, leopard, rhino and elephant). It’s also a fact that unlike the other big five, the buffalo gives no warning of an imminent charge. It’s complacency that gets you killed, and the same goes for investors with the macro-risks. We all know what the big macro-imbalances are out there, caused by years of loose money, but investors continue to ignore them at their peril.” – Albert Edwards, SocGen
Chart of the Day
Chart note: Up until the “double oughts,” the manual on gold read that it performed well under inflationary and deflationary circumstances, but not much else. However, as the decade of asset bubbles, financial institution failures, and global systemic and sovereign debt risk progressed, gold marched to higher ground one year after another. As events unfolded, it became increasingly clear that the metal was capable of delivering the goods under disinflationary circumstances as well. The fact of the matter is that during the 2000s – even as the inflation rate hovered in the low single digits (green area on chart] – gold managed to rise from under $300 per ounce in the early 2000s to nearly $1900 per ounce by 2011, a gain of roughly 633%.